by Dennis Crouch
DBN Holdings (DeLorme) v. International Trade Commission (Fed. Cir. 2022)
This case is a bit complicated procedurally — the basic facts are here:
- BriarTek’s brought an ITC action against DeLorme (now DBN) asserting U.S. Patent No. 7,991,380 covering “two-way global satellite communication devices.” DBN settled that dispute and agreed to stop importing the accused products.
- But, DBN actually continued to import covered products and the ITC assessed a civil penalty of $6.2 million for violation of the consent decree.
- After being charged with the penalty, DBN filed an action in Federal Court seeking a declaration that the patent claims were invalid. DBN won the case and the invalidity was affirmed on appeal. Once the patent was invalidated, the consent decree (by its terms) no longer barred DBN from importing products. However, DBN also wanted to escape from the $6.2 million fine for its pre-invalidation violations.
- The ITC refused to relieve DBN from payment of the fine — finding it “res judicata” based upon a prior affirmance of the fine by the Federal Circuit. Back on appeal in 2018, the Federal circuit vacated that judgment — holding instead that the ITC possessed authority to rescind or modify the civil penalty in light of the invalidity of the relevant patent claims.
- Back on remand, the ITC maintained the penalty — finding that the ex post invalidation did not free DBN from penalties associated with its bad faith violation of the consent orders and disrespect to the ITC. This last decision is what is on appeal now, and the Federal Circuit has affirmed.
The Federal Circuit explains:
By entering the consent order, DBN agreed to discontinue any violation of Section 337. The ITC, in turn, terminated the investigation as required. From a contractual perspective, the breach of this promise provides the ITC a distinct ground for imposing a civil penalty. DBN agreed to the terms of the consent order, and those terms “unambiguously indicate[] that the invalidation trigger—like the expiration and unenforceability triggers—applies only prospectively.” Had the consent order been written in retrospective terms, DBN might have a stronger argument that the invalidation of the asserted claims renders the consent order null and void, or that modification is required. But under the clear terms of the consent order, DBN remained potentially liable for any violations up to the time of invalidation.
Slip Op. Judge Reyna’s opinion provides a rough roadmap for accused infringers entering into consent decrees — endeavor to negotiate retrospective terms regarding invalidity. This would look like something along these lines: “Defendant agrees to no longer import or sell any products infringing the asserted claims . . . . If the patent is later found invalid, Defendant will no longer be bound by the consent decree and the court will reconsider any prior adverse judgments against Defendant in light of the new invalidation.”
= = = =
The prospective/retrospective considerations here point toward a philosophical question of whether an invalidity decision is should be seen as an action cancelling a patent or instead is merely revealing that the patent has always been invalid. The consent order in this case agreement particularly states that DBN won’t import products “that infringe claims 1, 2, 5, 10–12, and 34 of the ’380 Patent.” One argument here is that the proper interpretation of “infringe” assumes patent validity. Once we figured out that the patent is invalid, doesn’t that mean that it was always invalid?
When a patent is found invalid, we know that it never should have issued.
— Dennis Crouch (@patentlyo) March 4, 2022
Meanwhile, every practitioner should be concerned about the PTO’s lying to applicants by modifying documents that it records in the Image File Wrapper, and pretending that those are the documents the applicant submitted: see link to blog.oppedahl.com and link to blog.oppedahl.com.
Oppedahl has been on fire about that!
“lying”
“After receiving the ack receipt, I went into IFW to look at the claims in IFW. To my astonishment, the strikethroughs and underscores were gone! ”
What a ta rd. This isn’t “lying”, it’s just some docx nonsense bs conversion stuff going on in the background beyond the PTO’s control.
“What happened is that the Patentcenter system tampered with my DOCX file and removed the strikethroughs and underscores. The Patentcenter system also tacked on a few extra characters at the end of the file name, namely “-APP.TEXT”. ”
In other words no “lying”, just some software conversion bs. Probably a version conflict or something with him using old school software etc.
“Yes, of course it is scary if I prepare a patent application in Libre Office”
Mhmm, we see what’s going on here. The USPTO needs to specify which program is used for prep, and then specify what version, otherwise conflicts.
Ah, the usual super intelligent commentary from “6”, who’s never spent a day acquiring, licensing or litigating patents.
It’s lying, b/c the PTO has been saying for several years now that “docx” is a standard, when the PTO’s own behavior shows it’s not.
It’s lying, b/c the ack rec’pt says that Carl submitted X when in fact he submitted Y, and the PTO changed what he submitted without telling him it was going to change it.
And it’s p—ks like you at the PTO who think this is a joke, and academics who think stuff like this doesn’t matter, which is why we’ll never ever see a blog post on this site addressing stuff like this.
The PTO is developing a p.o.s. filing system (“patentcenter”) and plans to force everyone to use it, come hell or high water, when the PTO could have just bought a great system from WIPO. Thus far patentcenter doesn’t do what it’s supposed to do, and the PTO refuses to listen to users who tell it what’s wrong. Part of this package is to force everyone to file in “docx” format because of legacy mistakes in the design of PTO software, when PTO could just allow everyone to file pdfs that they themselves have created and thus have control over, and to separately upload MS Word versions of the documents so that examiners can search. And rather than admit its multiple screw-ups and be transparent with the public, the PTO doubles down and continues to lie about this whole thing.
The claims-and-continuation rules under commissioner Dufus were shot down by the CAFC in 2008. The way the PTO is treating this docx filing thing, it’s going to go the same way. What a waste of so many people’s time and money. And this time the PTO will look much worse because whereas the c-a-c rules were merely beyond the PTO’s authority, in the present case it’s demonstrable that the PTO has repeatedly lied to the public.
BTW, 6: if it’s a version thing, why should any of us have to buy a particular version of MS Word to satisfy the PTO? Is someone at the PTO on MS’s payroll? If there’s a real standard, then the program used to create the document should be irrelevant.
6 is — as usual — clueless.
I don’t know about the l’ing and such. But it is an incredibly important issue. Nothing is worse for a patent attorney than not to perfect the rights of a client and what a nightmare to have the IFW being messed up.
Night Writer – it is (Much) more than merely the IFW being messed up.
“And it’s p—ks like you at the PTO who think this is a joke, and academics who think stuff like this doesn’t matter, which is why we’ll never ever see a blog post on this site addressing stuff like this.”
I don’t believe I said that it was a joke. I absolutely think it could have an impact. That being said, obviously there is some technical shinanigans going on, and they’re likely on your end. From the sound of it, you’re just a boomer boomering it up with keeping up with your upgrades expecting the whole world to be frozen in 2005 or whatever, forever. I wouldn’t doubt if they in fact already have version req’s published somewhere.
“The PTO is developing a p.o.s. filing system (“patentcenter”) and plans to force everyone to use it, come hell or high water, when the PTO could have just bought a great system from WIPO. Thus far patentcenter doesn’t do what it’s supposed to do, and the PTO refuses to listen to users who tell it what’s wrong. Part of this package is to force everyone to file in “docx” format because of legacy mistakes in the design of PTO software, when PTO could just allow everyone to file pdfs that they themselves have created and thus have control over, and to separately upload MS Word versions of the documents so that examiners can search. ”
Your suggestion seems fine w me, obviously they seem to think there is some other reason to have it this way.
“And rather than admit its multiple screw-ups and be transparent with the public, the PTO doubles down and continues to lie about this whole thing.”
You keep saying “li e” and “l ying” etc. when the word just doesn’t really fit there. IF there was some PTO “screw up” (which is unlikely to be the case but lets be generous), then they’ll say so if it can be shown to actually be their “screw up” rather than say, oh I don’t know, your screw up not knowing how to use docx properly or having old versions or whatever. The pto makes no assurances that what you submit to them will not successfully confuse their system. Which you seem to have accomplished, which is great, but isn’t them telling falsehoods.
“The claims-and-continuation rules under commissioner Dufus were shot down by the CAFC in 2008. The way the PTO is treating this docx filing thing, it’s going to go the same way.”
You mean a complete and total office victory unless you get a sympathetic director? I mean, ok bruh.
“in the present case it’s demonstrable that the PTO has repeatedly lied to the public.”
Gl bruh, I really mean it.
“BTW, 6: if it’s a version thing, why should any of us have to buy a particular version of MS Word to satisfy the PTO? Is someone at the PTO on MS’s payroll? If there’s a real standard, then the program used to create the document should be irrelevant.”
Gotta keep your equipment up to date(at least ish), if you prefer that they make it a condition for a reg no. then I’m sure they can oblige you.
“then the program used to create the document should be irrelevant”
Muh “should” “should” “should”. Obviously according to you, it apparently is not irl, so your shoulds don’t really matter.
But with all that being said, idk whether you’re truly forced into using MS word or if their competition also will let you use it appropriately, you’ll have to ask the office.
“You mean a complete and total office victory unless you get a sympathetic director? I mean, ok bruh.”
“Bruh”, the Office got its tail handed to it on a platter by the Federal Circuit. If you like pretending you live in an alternate universe fine, except please get out of examining, b/c the laws of physics and chemistry are not imaginary.
And no, there are no good reasons for the PTO to do what it’s doing with regard to PatentCenter and .docx. But apparently the PTO feels that, being the only agency that can grant patents, its level of efficiency (or more accurately, lack thereof) doesn’t matter, so it will do whatever it wants.
“Promote the progress”. Rrrrriiiiiggggghhhhht.
““Bruh”, the Office got its tail handed to it on a platter by the Federal Circuit. ”
You do know the supremes were about to overturn that nonsense from the fed circ right? Kappos came in and took pity. That’s the history. Admin agency experts have already published that the office almost surely has the authority to still put forward the same rules and take them to the supremes under the power of the executive should they so deem it necessary. Again, that’s reality. Your “btch baby branch” of the courts need to buttowsky themselves voluntarily and let the gov function, not only in patents but across the gov. This ain’t supposed to be “the courts butt in on all executive and legislative powers all the time” land.
“And no, there are no good reasons for the PTO to do what it’s doing with regard to PatentCenter and .docx. But apparently the PTO feels that, being the only agency that can grant patents, its level of efficiency (or more accurately, lack thereof) doesn’t matter, so it will do whatever it wants.”
You say that, but I doubt you’re in the higher lvl meetings and have full knowledge. You should stop by and talk to the guys sometime and get word straight from the horse’s mouth.
“You do know the supremes were about to overturn that nonsense from the fed circ right? Kappos came in and took pity.”
LOL – 6 lost in his own delusions of yesteryear.
“From the sound of it, you’re just a boomer boomering it up ”
Thank goodness for paper filing. 🙂
“When a patent is found invalid, we know that it never should have issued.”
That’s a trick of language there D, relying heavily on what “should” means here. Obviously any patent that goes through a fair examination procedure as implemented “should” issue, according to congress (literally they made that the system and continue it as such). Obviously at the same time however, it “should not” have issued if the finding of invalidity was itself validly done.
>and the court will reconsider any prior adverse judgments
It’s hard to see the court / other party agreeing given the strong policies for both pro-settlements and pro-finality.
>toward a philosophical question of whether an invalidity decision is should be seen as an action cancelling a patent or instead is merely revealing that the patent has always been invalid.
The third option is that it’s a jury question (i.e., a gray area). A Consent Agreement is a means of managing that uncertainty.
In the Twitter comments – but worth reposting here:
link to digitalcommons.wcl.american.edu
A patent that is found invalid by a jury and upheld on appeal never should have been issued. A patent invalidated by a judge or panel of bureaucrats without putting the factual disputes to a jury may or may not have been properly issued.
clarification – a patent that is found invalid by a jury and [wherein the jury’s determination] is upheld on appeal never should have been issued…
[T]he proper interpretation of “infringe” assumes patent validity.
Not true. This is the logic of Justice Scalia’s dissent in Commil USA v. Cisco Systems, but the Court rejected that logic. Infringement and validity are legally separate questions. It is possible to infringe an invalid patent.
Once we figured out that the patent is invalid, doesn’t that mean that it was always invalid?
Almost. It could be the case that a patent rightly grants, and then another patent subsequently publishes that anticipates based on the filing date. Given that it could not be known to a certainty at the time of grant that the anticipating patent would publish, the grant was rightful at the time.
Nevertheless, it is mostly true to say that invalid now = always invalid. This is irrelevant, however, as to whether certain articles are or are not “infringing” as a matter of contract construction.
Well we know that it’s not truly a “like it never happened” situation…after all, previous licensees don’t get their money back, and previous competitors can’t sue for whatever they may have lost by refraining from using the invention.
If a party violates a then-valid court order and gets fined for that order’s clear violation [not for the infringement itself], then what happens to the patent later is not relevant.
OT, but, you know this bill passing without patent reform is actually very significant. Means that patents have become forever hamstrung and beyond redemption barring some cataclysmic event.
link to cnbc.com
? NW, thanks for the hotlink, but the only patent law reform legislation even under serious Congressional committee consideration in this term did not contain anything you would have been likely to like.
Do you know for certain that this big Senate bi-partisan enacted “U.S. Innovation and Competition Act” does not contain any patent law changes?
Paul, I guess I don’t understand your response. My point is pretty clear that a huge bill just passed for improving innovation and competitiveness with China and there is no patent reform in the bill. This is a clear indication that patent reform is simply off the table that the means for improvement is not seen as needing patent reform.
NW, I was not disagreeing with your conclusion, just noting that the kind of patent reform you were hoping for was not ever even in the cards to begin with.
Paul, yes I know the current Ds want to continue to weaken patents.
That does seem to be desired by some Democrats for drug patents, but even a fully Democrat Congress has been unable to actually do anything. What realistic evidence do you have of widespread Republican Congressional support [or even concern] for all the things about current patent law you don’t like, that would suggest major such legislation being enacted as soon as we have another [likely] Republican majority Congress? Many Republicans voted for the AIA legislation that established IPRs, CBMs, PGRs, etc.
Come on Paul. There are a few Rs that have pushed for stronger patents. There have been a number of posts on this at ipwatchdog.
I never said “widespread” R support. But the major push to weaken patents has come from the Ds. I think at this point, though, it is hard to say that anyone supports patents save for a few Rs.
The infection from Efficient Infringers does indeed reach across both sides of the aisle.
The reference to the AIA is thus a bit of a canard.
A captured Congress (from either or both sides of the aisle) is STILL a captured Congress.
I think too with the AIA that it was misrepresented to Congress.
I think that the top patent lawyers knew that the IPRs would vastly reduce patents.
But again, though, it is most about estoppel and who can file an IPR. If this was tweaked properly and the PTAB changed a bit, then it could be a good system.
ipwatchdog has a proposal to change the PTAB, which would make the system work again.
For view on that process was far less “misrepresented” and simply far more captured.
For one, I was very active in contacting both my Representatives and my Senators as to why the AIA was abominable (and post grant review was not the only abomination), and WHY — given my professional understanding.
I know others were as well.
But the Voice$ that had captured the ears of those making the law belonged to the Efficient Infringers, who were lining both sides of the aisles with their “$peaking.”
lol autocorrect – “For view” => “My view”
Yes anon those who understood patents understood how bad the AIA was going to be for patents. I did a presentation at our law firm about how bad it was going to be.
Incidentally, at the same time there was an enormous effort to bifurcate the patent system, which I was indirectly involved in and my law firm was directly involved in.
Round II with the Lemley coming after bifurcation with a $100+ million payoff to him (which is speculative but based on his past behavior he expects some big bucks for his “scholarship.”)
Lemley $cholarship.
Night Writer,
That Senate bill passed LAST JUNE.
perhaps you meant to indicate that a similar bill has just (February 2022) passed the House and now the two bills will go through a consolidation process.
Both the House and Senate bills are not short (3,000 plus pages), so here is a link discussing these:
link to akingump.com
(I have no affiliation with the source, and do not validate its veracity)
Yes I am aware anon.
The sad thing is that Biden has moved to outright giving commercial companies money to try to compete with chip manufacturing rather than fixing the incentives that have caused the chip manufactures to move offshore.
Typical “solution” that won’t work and will be asking for more $$$ in a few years.
The tyranny of the “make product” — those that have studied innovation can only shake their heads at the short-sightedness.
It would seem that if the patent was invalidated on an intervening change of common law than it should be presumed valid until the date of invalidation.
Isn’t it so that patents issued prior to a change in statutory law are to remain valid until the expiry of their term?
Since amounts paid between private parties in settlements are not recoverable even if the patent(s) at issue are later found to be invalid, isn’t the validity status really just a philosophical construct since there is no practical affect of retroactive invalidity?
By “intervening change of common law” you will run into the FACT that the Court (and courts) refuse to acknowledge that they have actually rewritten the Constitutionally directed to ONLY ONE branch legislative law.
Whether THAT (their re-writing) is actually true or not is an entirely different matter.
Sounds a bit like applicant admitted prior art.
It does not matter that an applicant’s admission as to prior art is shown to be incorrect, and the item is NOT in fact prior art, the applicant “agreeing” (to her own statement) to that effect is binding.
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